China to Become World's Largest Economy by 2035, Double US by 2050

post ww2, Japan leverage its extremely low labor cost to export relatively low-tech products (shirts, pants, etc). graudually, it shifted its focus higher tech items (transistor radio, car, hi-fi eqpt, camera, etc.) according to American news articles from the 50/60s, "made in Japan" was a sign of low-quality product. how time has changed that.

Japan did not allow for any foreign investment in its economy. that was ok as long as Japan, Inc continues to make profitable investments. A series of bad investments (most notably investement in real estate in No. American in the late 1980s) halted Japan's economic rise. it has been stuck in mud since the early 1990s.

China, in learning from Japan's experience as well as wanting to jumpstart its export economy, allows for foreign investment in its economy. In the event of financial / economic calamity, China's economy would not be stucked in mud like Japan.

In terms of productivity, economic speaking, China has not performed as well as Japan during her first 30 years of economy recovery. According to news article, China has been shifting its focus on infrastructure (road, railways, etc.); this will go a long way to increase productivity as well as domestic demand.

 

This is all very news paper talk. If you believe Japan's ail was its American invests, you should serious check China's invests in USTB etc. They don't do any better. (FYI, China is Top Foreign Holder of Fannie Mae, Freddie Mac Bonds.) What huge outward capital flow reflects though, is serious lack of coherent domestic market, over-reliance on exports. Also Japan was much successful in upscaling the industries and accumulating the intellectual property.

Let's sure hope China get it more right. Infrastructure has seriously been lagging compared to the growth rate. Even the central government recognize the need to shift to "sustainable growth".

BTW, global capital you were talking about, it doesn't care about sustainable growth. All they care is profits, sustainable much or not. They can always find the next "China". The only definite favor on China's side is the sheer scale, which makes investments think twice about leaving.

I'm not saying China won't be one of world's growth engines, I'm just saying the picture is less rosier than what you might think. And there is serious growth pain to pay ahead.

 

If you take out the service sector, will the economy continue to grow? How will resources and products be delivered to the end user? How will many consumers afford it?

Money spent on energy isn't more special than money spent on video games or Rockets tickets. It could be worth more or less depending on need or psychological value, but the currency stays the same.

You're saying that a bigger pinch in resources proves that wealth is zero sum. Resource allocation can be zero sum, but wealth, in the big picture, is not. Even resource allocation is based upon collective need. If the world switched to solar as a result in innovation or new efficiencies, then the energy crisis is defused and some other bottleneck crisis would arise from it.

 

just rhetoric that has no meaning. i challenge you to back up this claim

this contradicts your claim "They can always find the next "China".

my thinking is based on the studies / reports by the World Bank and Rand corp. what is the basis of your claim ?

 

I personally never put much faith on such pure and simple predictions. You just don't know what exactly will happen ten /twenty/thrity years down the road. The whole China hype is sort of like what happened to Japan before the economic crisis hit it in the 1980s.

The unique characteriestic about China is its size, both a strength and weakness. It would take much longer for China to reach the status of world's largest per-capita-economy than world's largest economy if it could ever make it.

 

I'll be 54 when that happens, so better make plans cause I'm moving to China....

 

the dizzying height of ignorance.

what happend to Japan, spanning over 40 yerssfrom post ww2 to the late 1980s, was not a hype. Japan rose from a worn-torn nation to the #2 economy in the world. how is that a hype ?

 

Ted Koppel on China:

<embed style="width:400px; height:326px;" id="VideoPlayback" type="application/x-shockwave-flash" src="http://video.google.com/googleplayer.swf?docId=-5778627722841581708:145000:2337000&hl=en" flashvars=""> </embed>

 

Because they did it based on a bunch of bad loans that their banks were discouraged from calling in. It was all a sham; basically most of their banking system was completely insolvent and they were hiding it behind tricky accounting (like you're seeing sporadically now in America). Their "economic growth" produced a huge bubble that burst throughout the 90s. They still haven't completely recovered. If China doesn't cool off and instill some regulations, this will happen there too.

 

China's got enough major social problems they're gonna be forced to deal with over the next 30 years I hardly think they're gonna have the time to think about screwing with the world.

Anyway, a richer China mean a richer US so who cares. When they have more money they might actually buy our products with the dollars we give them instead of our debt. As long as our standard of living keeps going up it doesn't really matter.

 

If the chinese poor had a higher standard of living, they could live it up and entertain themselves with other things, besides making babies. The population would take care of itself.

Ok, maybe not.

 

What other types of entertainments would draw them away from making babies?

 

China's population growth, especially in the cities, is decreasing rapidly. Right now, people in cities aren't having kids. And the cities are partially supported by immigration from the rural areas.

Pretty soon, China's economy is going to face a serious problem with aging population. And it's really going to hurt the economy.

 

You are really using "pretty soon" loosely here.

http://www.nationmaster.com/country/ch/Age_distribution

Take a look at their 2005 age distribution, there are still at least 25-30 years before China will start having an aging population. By that time, the world economy will probably have evolved. Technology can well have taken over up to the point that massive working population is no longer a positive factor in economic growth at that time, or it will even be a hindrance.